This year and next critical for many LNG projects: IEA analyst

Platts ^ | 31 Mar 09 | Platts LNG Daily

[thackney]

This year and next year will see critical decisions being made on many of the world's LNG terminals, but these terminals will not help mitigate against security of supply problems, said Hiroshi Hashimoto, natural gas analyst at the International Energy Agency, Tuesday.

The rest of 2009 and all of 2010 will see final investment decisions for LNG terminals worldwide, including some of the biggest current projects like Shtokman in Russia and Gorgon in Australia, said Hashimoto at an LNG conference in Barcelona.

If these projects get the final go-ahead, they will mostly come online in the years 2014-2015, he said.

However as a measure against security of supply problems, enlarged LNG production will bring little relief, he said. "As an energy security measure, LNG will remain marginal and supplemental" to other forms of energy supply, he said.

What LNG can offer instead is long-term security, especially in the US, and short-term relief in emergencies, the analyst said. It can also provide a balancing role, alongside other energy supplies.

Whereas LNG in the early 1990s was considered "the most expensive fossil fuel," it is now generally thought to be a less expensive alternative to pipeline gas, as well as oil, said Hashimoto.

In addition, while LNG importers around two decades ago were an exclusive club--and mainly composed of OECD members--the commodity is now affordable to players in emerging markets, he added. LNG projects used to be billed as capital intensive but they are now a mixture of giant models and much smaller-scale ones, he said.

LNG is able to enhance market connectivity and flexibility and is, by nature, a global commodity, Hashimoto said. It generally grows faster than other parts of the gas business although it has, in recent years, seen an unanticipated slowdown in growth.

Final investment decisions were made for only one LNG export project in 2008, three in 2007 and one in 2006, he said.

"Final investment decisions are currently few compared with the trend to 2005," he said. It was anticipated in the past that LNG growth would be more significant, he added.